Not everyone has the luxury of slinging cryptocurrencies in the world of DeFi protocols, exchanges, and wallets.
Others have to lean on traditional investment vehicles to gain crypto exposure.
There's a ton of potential candidates in the stock market to lean on to express a given crypto thesis, but it's all about choosing the right names.
We've been pointing out the dispersion of performance between crypto equities and the underlying cryptocurrencies themselves; the stocks have underperformed, while the coins have outperformed.
But it isn't that simple -- there's some level of nuance involved.
As we’ve said before, one of the big characteristics that often differentiates good traders from mediocre ones is the ability to sit out when necessary.
Correlations to weak equities remain highly elevated. We’d like for those to dislocate before getting overly optimistic in the near term.
When it comes time to put money back on the table again, it’ll be obvious. Otherwise, we’ll continue being patient.
In a tape as messy is this, it pays to be patient and only focus on A+ setups.
The names emerging from bases on solid volume are the ones you want to lean on. By slinging names in messy ranges, you'd only be asking to get whipsawed.
We can't help but notice the relative strength coming out from ApeCoin $APE and STEPN $GMT, which we mentioned a few days back.
Both have real nice shapes emerging from their post-ICO bases:
Looking tactically, they both offer us some decent risk-versus-reward for a speculative bet.
There are times when you need to trade like a pig. With these macro conditions, now is not that time.
In those roaring crypto bull markets we've all come to know, bravery is more important than brains. But, in periods like these, traders who are patient get rewarded.
When the market inevitably improves, you can get back to making money instead of picking up pennies to recover from big drawdowns by avoiding the mental hurdle of overtrading.
As we've said before, one of the big characteristics that often differentiates good traders from mediocre ones is the ability to sit out when necessary.
There's that old adage that there are only three short periods each year to make money. Or consider the classic Paul Tudor Jones quote that “markets trend only about 15 percent of the time; the rest of the time they move sideways.”
We can't reiterate this enough; there's a huge difference between looking for a setup and seeing one.
If you go into the market with preconceived notions about how things should be instead of seeing them for how they really are, you might as well go take a punt on the dish lickers.
In conjunction with the All Star Charts quarterly playbook, this week's report is a copy of the crypto note we'll be attaching to the playbook.
It covers the themes we're monitoring, a few trades we like taking, and what we anticipate for the asset class moving into the second quarter.
Hope you had a great long weekend.
Cheers guys.
As we move into the second quarter, we leave behind a messy period in the world of cryptocurrencies. Bitcoin ended the first quarter slightly lower while the entire asset class, measured by the total market capitalization, experienced a 9% loss. In this period, the new highs list among the alts has been ominously quiet as participation waned.
There’s been little in the way of market action in this environment. Staying on the sidelines in elevated stablecoin positions has been rewarded, while those who overtraded and bought into breakouts were punished.
Yesterday we documented how we're shifting back to our defensive strategy. Tight trading correlations to weak equities dictate this approach.
At the same time, we've been stopped out of most altcoin long positions.
There's little to discuss in the way of tactical trading opportunities.
Even the strongest names can't get it done when we look at the alts. We're seeing many failed breakouts, and there's little to like in shorter time frames right now.
As of the writing of this note, we're currently watching Bitcoin lose our risk management level of 42,500. We entered into some small hedging positions on the loss of 46,000, but now we're looking to add to our hedging positions/raising cash this morning.
